Representatives of the Banking Association of Montenegro (UBCG) recently shared an overview of the economic and banking sectors in Montenegro at the European Banking Federation (EBF) meeting in Brussels, indicating that the country can expect a final decision on its membership in the SEPA mechanism in the coming months.
The 60th EBF meeting of affiliate members took place on Wednesday, attended by UBCG General Secretary Bratislav Pejaković. The meeting included discussions on the state of banks in the Western Balkans and EBF activities, as well as the implementation of the digital euro and an analysis of Germany’s economy, which is experiencing its second year in recession.
The impact of increased consolidation across various sectors on banks and the broader financial industry was highlighted. The improvement in Montenegro’s credit rating was noted as a confirmation of the country’s stability and progress, suggesting it is becoming a predictable and stable environment for investment.
Recent data shows that inflation in August was 2.2%, marking the lowest rate since April 2021. The trend of public debt relative to gross domestic product (GDP) has been decreasing in recent years, primarily due to robust economic growth. However, as deadlines for large debt repayments approach, including domestic and foreign bonds, it will be crucial to secure funds to meet these obligations timely.
Mid-term debt projections included in the Fiscal Strategy from now until 2027 indicate the government’s aim to align net debt with Maastricht criteria, targeting around 60% of GDP, depending on the year.
UBCG also reported an increase in borrowing among Montenegrin citizens and businesses this year, with new loans in the first half of the year showing a 28.3% annual growth. Bank deposits continue to rise, reaching a record level by the end of the second quarter.
In March, the Central Bank of Montenegro (CBCG) initiated a reduction in interest rates for citizens, a move that all banks adopted, lowering rates by 1-2%, bringing conditions closer to those in developed EU countries.
As of June, the net profit of Montenegrin banks stood at €87.2 million, a 31.4% increase compared to June of the previous year.
Looking ahead, Montenegro can expect a final decision on SEPA membership in the coming months, after which banks will enter a challenging organizational and technical phase. Key topics for harmonizing regulations with EU directives include closing chapters under the purview of the CBCG and intensifying activities in chapters 4 (Capital Movement Freedom), 9 (Financial Services), and 17 (Economic and Monetary Union).
